United States District Court, D. Nevada
C. JONES United States District Judge
an action to recover income taxes paid for tax year 2006.
Pending before the Court are Plaintiff's Motion for
Summary Judgment, (ECF No. 58), Defendant's Motion to
Strike the Declaration of Edward Ord, (ECF No. 60),
Defendant's Motion to Strike the Declaration of Theodore
Lee, (ECF No. 67), and Defendant's Motion for Leave to
File a Response to Lee's Request to Strike
Defendant's Response to ECF No. 62, (ECF No. 70). For the
reasons given herein, the Court denies the Motion for Summary
Judgment and denies the remaining motions as moot.
FACTS AND PROCEDURAL HISTORY
came time to pay federal income taxes for the year 2006,
Plaintiff Theodore Lee was being audited by the Internal
Revenue Service for returns he had filed for 1999 through
2005. (Mot. Summ. J. 3-4, ECF No. 58.) As a result of the
audit, Lee chose not to file a tax return for 2006 when it
came due, deferring its filing until April 2010. (Resp. 3-4,
ECF No. 59.) Lee justifies the delay by asserting he had a
legitimate fear of criminal prosecution in the event his 2006
return were inconsistent with the IRS's final
determinations in auditing his returns for prior years. (Mot.
Summ. J. 3-4.) Therefore, Lee argues he had to wait for the
IRS to conclude its audit before filing his 2006 return, that
he be able to conform his 2006 return to the results of the
in April 2010, Lee filed his 2006 income tax return.
(Id. at 4.) Lee asserts that he adopted the
IRS's positions from the audit in completing his 2006
return, reporting a $155, 098 check (“the Check”)
from a former employer as income. (Id.; Resp. 3, ECF
No. 59.) Through this lawsuit, Lee seeks to recover income
taxes paid on the Check, arguing the Check should have been
classified as a non-taxable gift, rather than taxable income.
answering Lee's Complaint, the United States asserted a
counterclaim for civil penalties and interest based on the
late filing of Lee's 2006 return and late payment of his
2006 income taxes, pursuant to 28 U.S.C. § 6651(a).
(Answer and Countercl. 5-6, ECF No. 10.) Currently, the
United States claims an amount of approximately $24, 000,
“plus additional interest that may accrue until the
balance is paid in full.” (Resp. 4, ECF No. 59.)
moves for summary judgment on Defendant's counterclaim
for civil penalties and interest, arguing that his decision
to defer filing his 2006 income tax return is protected by
the Fifth Amendment right not to be compelled to make
self-incriminating statements. Accordingly, Lee contends that
any civil penalty assessment is impermissible as a matter of
law, because it would amount to an unconstitutional
punishment for having invoked his Fifth Amendment right.
must grant summary judgment when “the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). Material facts are those which may affect
the outcome of the case. See Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). A dispute as to a
material fact is genuine if there is sufficient evidence for
a reasonable jury to return a verdict for the nonmoving
party. See Id. A principal purpose of summary
judgment is “to isolate and dispose of factually
unsupported claims.” Celotex Corp. v. Catrett,
477 U.S. 317, 323-24 (1986).
determining summary judgment, a court uses a burden-shifting
scheme. The moving party must first satisfy its initial
burden. “When the party moving for summary judgment
would bear the burden of proof at trial, it must come forward
with evidence which would entitle it to a directed verdict if
the evidence went uncontroverted at trial.” C.A.R.
Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d
474, 480 (9th Cir. 2000) (citation and internal quotation
marks omitted). In contrast, when the nonmoving party bears
the burden of proving the claim or defense, the moving party
can meet its burden in two ways: (1) by presenting evidence
to negate an essential element of the nonmoving party's
case; or (2) by demonstrating that the nonmoving party failed
to make a showing sufficient to establish an element
essential to that party's case on which that party will
bear the burden of proof at trial. See Celotex
Corp., 477 U.S. at 323-24.
moving party fails to meet its initial burden, summary
judgment must be denied and the court need not consider the
nonmoving party's evidence. See Adickes v. S.H. Kress
& Co., 398 U.S. 144 (1970). If the moving party
meets its initial burden, the burden then shifts to the
opposing party to establish a genuine issue of material fact.
See Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986). To establish the
existence of a factual dispute, the opposing party need not
establish a material issue of fact conclusively in its favor.
It is sufficient that “the claimed factual dispute be
shown to require a jury or judge to resolve the parties'
differing versions of the truth at trial.” T.W.
Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n,
809 F.2d 626, 631 (9th Cir. 1987). In other words, the
nonmoving party cannot avoid summary judgment by relying
solely on conclusory allegations unsupported by facts.
See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir.
1989). Instead, the opposition must go beyond the assertions
and allegations of the pleadings and set forth specific facts
by producing competent evidence that shows a genuine issue
for trial. See Fed. R. Civ. P. 56(e); Celotex
Corp., 477 U.S. at 324.
summary judgment stage, a court's function is not to
weigh the evidence and determine the truth, but to determine
whether there is a genuine issue for trial. See
Anderson, 477 U.S. at 249. The evidence of the nonmovant
is “to be believed, and all justifiable inferences are
to be drawn in his favor.” Id. at 255. But if
the evidence of the nonmoving party is merely colorable or is
not significantly probative, summary judgment may be granted.
See Id. at 249-50. Notably, facts are only viewed in
the light most favorable to the non-moving party where there
is a genuine dispute about those facts. Scott v.
Harris, 550 U.S. 372, 380 (2007). That is, even where
the underlying claim contains a reasonableness test, where a
party's evidence is so clearly contradicted by the record
as a whole that no reasonable jury could believe it, “a
court should not adopt that version of the facts for purposes
of ruling on a motion for summary judgment.”
penalties are imposed upon taxpayers pursuant to 26 U.S.C.
§ 6651(a)(1) for failure to timely file income tax
returns and pursuant to 26 U.S.C. § 6651(a)(2) for
failure to pay the proper tax due on a return, “unless
it is shown that such failure is due to reasonable cause and
not due to willful neglect.” 26 U.S.C. § 6651(a).
The burden of establishing reasonable cause and lack of
willful neglect ...